U.S. printer bans all orders from South Dakota in response to Supreme Court ruling

Given the recent NAFTA controversy, name-calling and political rhetoric, it’s safe to say that the legislation that federal and provincial/state lawmakers pass can affect printing and other businesses on both sides of the border in a huge way. Here’s how one such local decision is, and likely will have, a negative effect on small printers in the U.S. A Supreme Court decision made recently (South Dakota vs Wayfair, Inc., et al.) now requires online retailers to charge sales tax on orders made from South Dakota. In response, one online retailer – Company Folders – has announced that it will be rejecting all purchases made from South Dakota until further notice. In Canada, sales tax is charged whether you’re an online retailer or have a physical store. The general rule of thumb here is that you charge customers the GST or HST of the province where the shipment is being delivered. That being said, some provinces may still apply sales tax differently from other jurisdictions.

Vladimir Gendleman.
Vladimir Gendleman.

“It’s disappointing to have to turn away business,” said Vladimir Gendelman, founder and CEO of Company Folders based in Pontiac, Michigan. “However, the Supreme Court hasn’t left us much choice. This is an irresponsible decision that will have horrible implications for any small business that sells online – including Company Folders.” According to the Supreme Court’s ruling, the sales tax requirement applies to any company with more than $100,000 in annual sales or 200 annual transactions from the state of South Dakota. This is problematic for businesses like Company Folders and scores of others who are unable to anticipate whether or not tax will be required year-to-year.

“It’s just not feasible for us to do business with South Dakota while also complying with these new rules,” said Gendelman. “It would be absurd for us to charge all of our South Dakotan clients an extra bill after the fact, if we end up crossing the threshold. Nor would it be worth the hassle to charge them sales tax up front and then send a refund later if the tax isn’t required.” Gendelman, along with many other small business owners, fear that the decision could lead other states to enact similar regulations – “effectively preventing companies who lack the necessary resources from doing any business at all.”

“Every state has its own tax requirements,” Gendelman added. “Keeping track of all of them, registering for the necessary permits, filing taxes every month (or even twice a month), and developing tax collection software would be an absolute nightmare. It would require an investment of time and money that we simply can’t afford. Our hope is that legislators will see the disastrous effect that this ruling has on small businesses, and take action before it’s too late. Until then, I’m sorry to say that clients in South Dakota will need to look elsewhere.” More information: www.companyfolders.com.



Tony Curcio is the editor of Graphic Arts Magazine.